Spotlight on NAFTA (September 2017)

As part of our renewed focus on the Western Hemisphere, the Blue Star Brief is pleased to introduce “Spotlight on NAFTA,” a feature that will track what is occurring behind the headlines as the United States, Canada, and Mexico try to complete negotiations by the end of 2017.

The North American Free Trade Agreement (NAFTA) has been in the cross-hairs throughout the U.S. presidential campaign in 2016 and during the first eight months of the Trump administration as the three countries grapple with whether to amend, renegotiate, or terminate the world’s largest free trade area linking 444 million people producing $17 trillion in goods and services.

What is happening?

Three-way negotiations have been launched and are continuing at an intensive pace. The first round occurred in Washington, DC on August 16-20, followed by a second round in Mexico City on September 1-5. The third round is scheduled to take place in Ottawa in late September.

What are people saying?

On August 22, President Trump cast doubts on the negotiations after the first round, saying, “Personally, I don’t think we can make a deal…I think we’ll end up probably terminating NAFTA at some point.”

On August 30, Mexican Foreign Minister Luis Videgaray said that “we don’t believe it would be a correct route or a viable route to rescind the treaty just as we’re in a process of renegotiation.” Meanwhile, populist presidential candidate Andres Manuel Lopez Obrador called for the talks to be “suspended” until after Mexico’s 2018 elections.

On September 5, negotiators from the U.S., Canada, and Mexico released a joint statement, saying that “important progress was achieved in many disciplines and the Parties expect more in the coming weeks.”

What are the sticking points?

The United States seeks to modernize NAFTA to address America’s persistent trade imbalances in North America – especially the bilateral trade deficit with Mexico.

Canada is pushing for higher labor standards, including a provision which calls for gender equality in the workforce, as well as a new environmental provision that would prevent a country from intentionally weakening climate-change policies to attract investment.

Mexico wants the U.S. to move off of its absolutist positions on the trade deficit while wrapping up the negotiations quickly so they do not get bogged down in the 2018 presidential elections.

What’s next?

Negotiators are heading to Ottawa for September 23-27 for the third round of talks. Stay tuned.

What has impressed me the most in my many years of working closely with the Blue Star Strategies team is their geographical breadth. From Eastern Europe to the Middle East to Central America, they are always able to deftly navigate the geopolitical waters.